Listen now: How you can help stop money differences from coming between you and your friends by learning ways to have those awkward conversations.
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Hey, humans, I’m Michael Liersch, PhD in behavioral science, Head of Advice and Planning for Wells Fargo Wealth and Investment Management. And this is the About Money Podcast presented by Wells Fargo. I’m a behavioral scientist who loves openly discussing money to help humans better understand their money behaviors. By understanding our money behaviors, we all have the opportunity to make better money decisions.
We’re gonna have a lot of fun together, and start our first season with money taboos. For many of us, money was and still is a taboo topic to openly discuss. The question is why? We’re gonna address those taboos head on. And break through money silence. So we can all get closer to our money goals.
In this episode we’re gonna ask ourselves how do I have the money talk with my friends? This idea of talking about money with friends is perhaps one of the most taboo topics, because people don’t want to make their friendships quote-unquote “all about money”.
That said, I think we all are quite aware that we engage in social comparisons with others, honestly whether they’re our friends or not. By the clothes we wear. The devices we carry. By the houses we own or don’t own. The apartments we live in. The apartments we rent. Everything we have, or we engage in from a financial perspective can be compared to, or made relative to other human beings. So when it comes to our friends, whether we like it or not, even though money conversations can be very taboo, because we don’t want to make each other uncomfortable through those social comparisons, there are still silent comparisons being made each and every day. The bottom line is even though we don’t want to make it all about money, ultimately by trying to prevent at all costs of bringing up money with our friends, we’re making it all about money, because we are fully aware that there those social comparisons exist. So it’s all a little ironic.
So what actions can we take to move beyond these taboos and engage in a more productive dialogue or interaction with our friends, especially when it comes to these types of social comparisons? And I want to highlight those social comparisons can be so uncomfortable that they can damage, as you well know, and even prevent friendships from continuing. So we really want to get beyond that, because friends are great. There’s a lot of research that friendships are extraordinarily valuable from financial outcomes, honestly, because that’s your network, all the way to your emotional and health outcomes. So let’s figure this out. So some actions for you to take when you’re interacting with your friends around money.
The first is to simply acknowledge with your friends that social comparisons exist. Try to normalize this idea that all of you are different when it comes to how you express your values. When it comes to money, how you express your use of money itself. Meaning, the things you buy. The things you own. The things that in a sense display your money and your wealth. Acknowledge that you might all have different perspectives. And that that’s okay. And that sharing those perspectives, especially the values on a philosophical level isn’t a negative thing. It’s something to be open about, especially if you’re friends, who really want to interact with each other on an ongoing basis, and make that relationship sustainable. So all you’re doing is acknowledging that it’s all right to be different.
The second action I’d encourage you to take is to really establish a framework for interacting around money before money enters into the interaction. And this one is key, especially when it comes to involving, not just a friend and a friend. So let’s say me Michael Liersch, I have a best friend from college that I hang out with all the time. When we’re interacting with each other those conversations are a little easier to have. But when spouses and partners start being involved, children start being involved, that becomes more difficult to have those conversations, especially in the moment. So try to have those discussions and-and those interactions around money before money enters into the interaction. Really, really critical and key.
So I’m gonna give you a quick example. So if you’re getting together with your friends and the people they care about, you’re all merging, especially around an event. So think of a trip. A get-together that involves spending money on food. Whatever that is. Figure out what the framework is for the money that will be spent. What’s the budget? And ultimately, how is everyone going to transact with one another when it comes to money?
And I know that can feel super uncomfortable to do. But I will tell you it’s much easier to do than when you have eight people around a table, the check comes, and everyone’s looking at each other in terms of how you’re going to quote-unquote “split the bill” or even who’s gonna take it first. So doing it beforehand can just make everyone enjoy that experience that much more. And make you all feel much more comfortable about engaging in that.
It also gives the ability for people to opt out of the experience, especially if they don’t feel financially comfortable. And who wants their friends to feel financially uncomfortable? And then if you notice your friends opting out, especially on a regular basis, it gives you the ability to ask what’s going on here? And to have that dialogue so that maybe you can course-correct or adjust and do something that everyone is comfortable with.
The third thing that I’ll close with that I encourage you to do from an action standpoint, is not only to establish a framework with your friends in terms of interacting around money, but to also really revisit the interactions you’ve had with one another. What’s worked? What hasn’t worked? And this especially is productive for people, friends, who are living together. And I’ve been in roommate situations. I’m sure many of you have too. You can even equate this to spouses and partners as well. So what’s going well? What’s not going well? And let’s do more of what’s going well. And let’s do less of what’s not going well.
And so an example could be what’s going well is when we establish how we’re all gonna contribute to this friendship, to this relationship financially speaking in a productive way. We talk about it ahead of time. And that we all do our fair share. Because oftentimes, especially with friends, the dynamic and the key issue is that people think that maybe there’s a little bit of a lack of fairness.
And again, this happens in families too. And I’m sure you’ve all experienced it where one person’s contributing on an ongoing basis much more – at least perceptually speaking – than another person. And by the way, fair isn’t always equal. That’s very important. So just because you’re splitting it doesn’t necessarily make it fair from everyone’s perspective. Because perhaps you’re splitting it but one person is more able to afford it relative to the other person. And so that could be perceived as unfair.
So there’s a lot of dynamics there. And that’s why I encourage you not only to set up that proactive framework, but to go retrospective. Evaluate what’s working, what’s not working, so you can all establish those guidelines around what’s fair and what feels good in your ongoing interactions, and how you can adapt and course-correct.
So with that, enjoy your friends. Enjoy your family. And I hope you really open that money dialogue with your friends. And normalize those conversations, especially when it comes to your philosophies and your values and how you feel about money, so that you can have more productive interactions on an ongoing basis.
That was it for this episode of the About Money Podcast. Please email us with ideas or topics that you’d like us to address at AboutMoney@wellsfargo.com. If you really liked the episode, share it with your family, friends, or anyone who listens to podcasts. Wells Fargo About Money is produced by Wells Fargo. I’m Michael Liersch asking you to talk about money today.
This information is provided for educational and illustrative purposes only.
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